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Common agency, organizational design and the hold-up problem

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  • Carrasco, Vinicius
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    Abstract

    This paper shows that, in comparison to a single-regulator arrangement, when an agent reports to two regulators, he is confronted with more powerful ex-post incentives. This generates, from an ex-ante perspective, higher incentives for relationship-specific investment.

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    File URL: http://www.sciencedirect.com/science/article/B6V84-5033XPP-1/2/2d0355ebe47b66521915eac8c44ae128
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    Bibliographic Info

    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 108 (2010)
    Issue (Month): 3 (September)
    Pages: 264-268

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    Handle: RePEc:eee:ecolet:v:108:y:2010:i:3:p:264-268

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    Web page: http://www.elsevier.com/locate/ecolet

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    Keywords: Regulation Common agency Relationship-specific investments;

    References

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    1. Olsen, Trond E. & Torsvik, Gaute, 1995. "Intertemporal common agency and organizational design: How much decentralization?," European Economic Review, Elsevier, vol. 39(7), pages 1405-1428, August.
    2. David Martimort & Lars Stole, 2001. "The Revelation and Delegation Principles in Common Agency Games," CESifo Working Paper Series 575, CESifo Group Munich.
    3. Martimort, David, 1999. "Renegotiation Design with Multiple Regulators," Journal of Economic Theory, Elsevier, vol. 88(2), pages 261-293, October.
    4. Bernheim, B Douglas & Whinston, Michael D, 1986. "Common Agency," Econometrica, Econometric Society, vol. 54(4), pages 923-42, July.
    5. Martimort, David & Stole, Lars, 1999. "Contractual Externalities and Common Agency Equilibria," IDEI Working Papers 110, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2003.
    6. Costa, Cristiano M. & Ferreira, Daniel & Moreira, Humberto, 2005. "Biased managers, organizational design, and incentive provision," Economics Letters, Elsevier, vol. 86(3), pages 379-385, March.
    7. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    8. Martimort, David, 1994. "Exclusive Dealing, Common Agency and Multiprincipals Incentive Theory," IDEI Working Papers 43, Institut d'Économie Industrielle (IDEI), Toulouse, revised 1996.
    9. Oliver Hart & Sanford Grossman, 1985. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Working papers 372, Massachusetts Institute of Technology (MIT), Department of Economics.
    10. Hart, Oliver D. & Moore, John, 1990. "Property Rights and the Nature of the Firm," Scholarly Articles 3448675, Harvard University Department of Economics.
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